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How Do Recruitment Agencies Work? A Step-by-Step Overview

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May 14, 2020Recruiting

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Hiring is hard work, and for many businesses, it’s becoming increasingly difficult.

In early 2020, 54% of businesses reported a lack of unqualified candidates and it’s estimated that the number of unfilled jobs worldwide will reach more than 85 million by 2030.

Fortunately, recruiting agencies have the ability to step in and make the entire hiring process significantly easier for businesses of all sizes.

What is a recruitment agency?

Traditionally, the role of hiring is the employer's responsibility. 

But hiring is expensive and time-consuming when left in the hands of employers. On average, U.S. employers spend roughly $4,000 and take around 24 days to close out a new hire.

Enter the recruitment agency.

Recruitment agencies act as the bridge between employers and employees, handling the tasks of identifying top talent, vetting candidates, and presenting the top candidates to clients.

Although there are all types of employment agencies that share similarities with recruitment agencies, they are not one and the same. Recruitment agencies place an emphasis on finding talent for permanent positions, including upper-management and executive roles.

Find out how AppsFlyer successfully scaled their recruitment process.

How a recruitment agency works 

While services may vary slightly from one agency to the next, most recruiting companies use a similar process.

1. Agreement

When your company has decided to work with a particular recruitment agency, you’ll first need to come to an agreement.

Of course, you’ll need to agree to payment terms—generally, a retained fee or contingency fee structure. However, you’ll also need to reach terms regarding your expectations for the work.

Some recruitment agencies, for example, offer a guarantee period. This all but ensures that you receive a great hire. If your latest hire doesn’t work out during the period set forth, the agency will go back to the drawing board and continue the search for your next hire.

2. Profiling

Next, your recruitment agency will meet with you to discuss your hiring needs. Maybe your company needs multiple positions filled. Perhaps you have one critical executive position open.

The agency’s goal is to gather as much information as possible so they can identify and attract the best possible candidates for the job. Typically, you’ll provide your agency with a clear job description, a list of requirements, a list of important skills and attributes, as well as any other key criteria.

3. Sourcing

The agency will then scour their own database and networks for qualified candidates, and mobilize influencers to reach candidates within their own unique networks and circles. These recruiters are able to work swiftly, taking an average of six seconds to scan a resume.

With a list of potential candidates, the agency will then screen these individuals and set up interviews. On average, only 2% of applicants reach interviews.

4. Interviewing

The interview process is two-fold. First, the agency will arrange candidate interviews with their agency. This will allow the agency to get a better feel for the candidates and whether they might be good matches for your company (as well as good reflections of the agency).

It’s during this process that the agency will brief candidates on your company’s needs, culture, and long-term vision.

After using these interviews to narrow the pool of candidates further, your company will be briefed on each candidate and the agency will assist you in arranging final interviews. 51% of recruiters report that three interviews are needed before extending an offer to a candidate.

5. Offer Extension and Negotiation 

When you identify a candidate you’d like to hire, the recruitment agency can work with you to handle offer and compensation negotiations with the candidate. By taking offer negotiations off your plate, the recruiting agency will save you time and ensure the candidate has a primary point-of-contact throughout their experience. 

6. Onboarding

Once an offer has been accepted, the agency may assist your company with employee onboarding—an area where only 12% of employees are satisfied with their employers’ efforts.

Beyond helping both parties complete the necessary paperwork for employment, the agency will continue to make sure your new hire feels comfortable and excited to join your team!

Considering external recruiting? Here’s everything you need to know about  recruiting agencies.

Why should you work with a recruitment agency?

There are a host of reasons your company should turn to a recruitment agency for your hiring efforts, but there are three specific areas that stand out.

1. Access to better talent

Recruitment agencies have  access to larger talent networks.

Unlike most employers who only have access to LinkedIn, recruiting agencies lean on multiple sources—including their own platforms, in many cases—to glean as much of the top talent as possible.

Not to mention, they are able to mobilize industry connections to get referrals, which are considered to be five times more effective than other sources of hiring.

Recruitment agencies aren’t afraid to headhunt for the best candidates either. It’s not uncommon for them to successfully woo top passive talent from other companies. Many of these candidates aren’t found in the average search, as only 30% of the global workforce are active job seekers.

2. Better final candidates and hires

Unfortunately, when you pursue the wrong candidate through the hiring process, the perfect candidate you passed up earlier in the process may already be onboarding with your competitor. 

Worse yet—you might actually go as far as to hire a dishonest candidate without knowing. In a CareerBuilder survey, employers reported that 33% of bad hires were due to candidates lying about their qualifications.

Recruiting agencies are hiring experts. Not only do they have more time to vet candidates thoroughly—they also have the experience to better identify red flags.

As a result, when a recruitment agency hands over their top finds, you can be certain that you’ll receive properly vetted candidates who meet the criteria you set forth.

3. Save time and money

When you handle hiring internally, you can lose time and money on multiple fronts.

First, there’s the time spent searching and vetting candidates. A single opening attracts 250 resumes on average. As a business owner or executive, it’s likely that you’re juggling more pressing day-to-day responsibilities and that your time is better spent elsewhere.

Even when you hand off hiring duties to another employee, you’re now paying that employee top dollar to find your next hire.

You also lose time and money when you make a bad hire. Even putting the lack of productivity aside, there’s the time spent trying to retrain or rehabilitate a bad hire before ultimately parting ways.

Not to mention, turnover is costly as well. Data shows that losing a senior or executive level employee costs approximately 213% of that individual’s salary.

When you work with a recruitment agency, these concerns become nonissues. It’s incumbent on the agency to find your next great hire—that’s their area of expertise and why you count on them to hire your next top employee.

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